Europe’s over-achievers and their fall from grace

Ireland’s fall from grace has been rapid and far worse than that of its counterparts, even Greece. But life in the euro zone has still been one of profound growth, as it has for most of the other peripheral economies.

Take a look first at the progress of PIGS (Portugal, Ireland, Greece and Spain) GDP since 2007 when the global financial crisis took hold. In straight comparisons (ie, rebased to the same point) Ireland is far and away the biggest loser. Portugal is basically where it was.

But now take the rebasing back to roughly the time that the euro zone came together. First, it shows that Ireland’s fall is from a very high place. The decade has still been one of profound improvement in cumulative GDP even with the last few years’ misery. But it is front loaded.

Perhaps most interesting, however, is what the second graph (courtesy Reuters’ Scott Barber) says about the PIGS and the euro experiment. Despite major financial and market crises, Greece, Spain and Ireland have all seen their economies accumulate at a higher rate than the euro zone average. Only Portugal has been below average — a perennial slow grower.

Could any of this outperformance have been attained outside the euro zone? Probably not. But the question now is whether the current troubles are going to wipe out everything that has been achieved.